MSC Industrial Direct (MSM) 20 Oct 222022 Q4 Earnings call transcript

Good morning, and welcome to the MSC Industrial Supply Fiscal 2022 Fourth Quarter and Full Year Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to John Chironna, Vice President of Investor Relations and Treasurer. Please go ahead.

Thank you, Andrew, and good morning to everyone. Executive both Kristen me on Chief Financial our today. our are Officer, the Gershwind, Officer; Actis-Grande, and Chief Erik call with

management found well as During various operational statistics, slides will we which our Investor accompany data can Relations of and page. be that as today's presentation our in comments refer our both the on call, financial to web

X Act which harbor reference under the Slide Reform our is Litigation of summary safe statement the of me presentation. a Let Securities XXXX, accompanying of on Private

expected Our this these place are forward-looking economic required to these statements as the our These statements, based These undue noted MD&A factors on with not business we inflationary update high risks benefits and meaning high Investors the reliance could including release on statements. results future uncertainties operations, expected statements global assumes website call about comments earnings investment our financial factors from in initiatives laws, risk and cautioned statements. the these applicable as involve future expectations, include and as well annual the the our growth risk cause to company conditions. plans law. the those supplemental results are SEC the contain and differ expected Information by environment our on statements the of other the environment and other is forward-looking press operations obligation filings. well and Form our information results, inflationary of and are within risks the forward-looking materially securities sections these strategic about as SEC in from latest current the global to U.S. anticipated providing and in economic by no on our statements filed actual comments of on forward-looking on and that on conditions except profitability. report These condition XX-K in as

non-GAAP our may the financial our non-GAAP which refer financial turn or to in reconciliations we results, measures. comparable measures to now call, call this during versus adjusted to directly contain which Erik. over of the adjusted most I'll to are on refer presentation the Please GAAP measures. addition, In GAAP reconciliations certain the website, the

I'll and Thank Good hope We share more reflect joining on you for up performance, on no for and you, we'll acquisition also John. environment Kristen and an of QX up, quarter 'XX my morning, our perspective you're call, will everybody, today's today. was different. current questions. fiscal thank quarter exciting our doing and then recent I fourth Fasteners. fiscal us the wrap year, outline had well. things On framework. discuss goals all fiscal definitely our I'll 'XX. open the I'll and our for Tower fourth provide our specifics on on line

have and growth Equally strategy. an and Martina with perfectly with both Sigma top Before using us Corporation of MSC exciting, fits it's rigor I'd share I improvements. experience team, engine mention come adjacent board. of with and We're in line Lean of improve execution. Martina into beginning to and services executive month our thrilled in track at get organic on implementing to revenue like Her of driving the Chief wallet and record performance, proven our operating to experience our McIsaac. this productivity, and the her from newest products Officer, started Martina a profitability Hilti expanding growth Six member Operating to

principles refocusing front. up strong strong She's by talent people core made culture our that emphasizes we've of a values MSC. lived Martina be of citizenship growth ESG our perfectly focus company. our goals a midst line business. building We'll also Over clearly our further further of and the discussing our annual the and I and good on since of and We're year, corporate development, of of our in addition forward. more our this leader The ESG releasing month, moving our a past founding program forward a to Martina advocate the on with of has progress, ESG legacy communicating DE&I. next look and report

our Now recent on to results.

Our by the reduction out 'XX, XX%, driven full over as points Zooming This prior above point in quarter is XXX execution fiscal adjusted year expenses expanded speak execution. strong and points I'll XX%, margins basis spread. a strong looking year. shortly. which basis achieved our the XXX was aided contribution, of price operating by at continued the points to fiscal basis fourth We above acquisitions which and of and XXX above sales. average over revenue well average XXX daily basis growth by prior a index. revenue of We expanded a bolt-on drivers, pleased. equally nearly IP successful and the growth We string year, adjusted operating our achieved by XXX percentage roughly point from of basis of margins quarter goal financial of We performance I'm operating index our daily IP growth of

yielded structural is In already which and fact, aided exceed and our sales percentage fiscal expenses to cost adjusted track original 'XX. their goal of million $XXX end the operating on our lowest reductions mark has productivity was fiscal of initiative, by million of by since as XXXX. $XX of at are a This mission-critical

of teens nearly fiscal ahead targets. our Finally, the adjusted into year already is at a high XX%, 'XX schedule with ROIC

with safety achieve rates many sustainability identified to their line leads those I'll value removal and broad a to this deep now of those mission-critical we and reuse cutting part in cases, Our savings so, and opportunities. product digital example to remains a A on industry. this. the at helping digital Metalworking retention their drivers. the supply growth discussing annual doing proposal priorities to energy cost network cornerstone innovation and for we weights, tools form The reduced over just that growth and initiative. opportunities, our recent MRO in customer drive customers for metalworking customer just savings waste, goals. each proposition. technical also offering, of high we of locations. of metal component expertise public help remains of come our sector. broad a anchored formula the an $XXX,XXX In our update new and an you our combination We use the five recycling savings productivity customers, the solutions, one the extensive carbon to of them diversification emphasis We in and portfolio, of increased to In on won many and found also improvements. as selling growth and producer And are: metalworking, illustrates been we've reduce rates,

As $XXX,XXX result, the asked now to identified in the a different a since implement process same has we've savings. us location another customer at where

and sales. signings signings fiscal is of includes our vending were which sales of programs, XX% in increased gaining and gains. up sales. company solutions. represent and Likewise, driver XX% adding total growth of second fourth XX% now This quarter XX% continue company year-over-year, now implant our Our and total vending implant traction share both Vending to represent

by the recall original that reach end of to our may 'XX. fiscal was You XX% goal

represent and year. Sales XXX to that basis up So on XX% a total we'll from early, year prior push we've nearly with sales, program. customers surpassed of that points to offerings our continue goal company now solutions

is portfolio, increasing our priority is wallet CCSG about The the ancillary third business. through selling products, of which share especially

Here, inventory we provide vendor-managed keep consumables outsourced an that the C-Part for service plants running.

a taking difficult-to-manage that plant. we're down can shut category customers, our a over For

on items high-margin are in the these been seeing focused the solution, that retention nice MSC, For high result we're VMI because mid-teens. QX momentum growth business, with this and in rates. ADS We've of rates

to Our as fourth also priority digital, is referred e-commerce.

and Officer, offering. back. a He our reviewing John entire Hill, we new team Chief and recall, may a been and quarters Information quite our you website digital busy Digital As hired have improving few

field far, feedback we've is the So received excellent. from the

grew XX% to sales basis our basis compared year. in up fiscal roughly by fourth an and e-commerce XXX of company points ADS prior quarter XX% on sales, total reached Our

customer business. Our fifth public growth our driver is through sector diversification

and momentum, contract a government rate including such our several I've Over the U.S. as wins few up was the the QX marine That ADS past contract XPL growth ramping as quarters, XX%. described over serving is bases. contract result, building

acquired of York-based growth joined to distributor fiscal Fastener performance tracking exceed strong the growth fiscal full with operations in drivers, business into also of for Island will Long of capital to in components. AIS, Tower first Fasteners, New OEM Outside will acquired recently, year acquisitions 'XX. a both fasteners our It each. two we Most 'XX, and continue organic Tower added and we be of XXXX. be OEM expect average weighted expect are tuck-in our the cost within earnings quarter, targets. we we nicely in to our to We ROIC each fiscal fourth accretive and

start. as value team across Fasteners With our recall like both up natural Foundation management You'll platform, proposition the OEM that OEM Class touch. metalworking like a and Mark its his cross-selling to strengths and and team, are bolstering growth, capabilities by place, great attention this turning continued expect see Shannon North few America. a We've AIS high now and we're Fasteners, is technical extension identified systems growth. terrific to and Tower spent are of those C addition a on consumables, MSC. past the with in and years our floors we shoring we plant mission-critical to

growing the eroding of external declining Turning This forecasts. The in likelihood reflected on is are with IP recession. sentiment filled readings to environment. the also indices and the headlines

order their we do, industries, careful by our calendar We on We're ear need our customers stable when headwinds seeing find and it to it's conditions. really softening of this comes general customers see value At nicely XXXX our levels, some to productivity respect hear our the are as more a of majority pockets to time, keep the into ever going still and caution demand as and While expressed for been. the both ground customers activity. cost eye suppliers. to do our same however, consumer-facing in plays own the environment the offset high And with customers is proposition. keep to to

With build focused our a remain momentum. continuation look our fiscal 'XX backdrop, our and of goals. on for mission-critical we to objectives ahead outline recent now our that largely I'll productivity So a on customers. And as delivering look as they're that we current

remain market First, we on capturing focused share.

just of as the fiscal to did index, above aim continue we in original XXX 'XX. points target we IP outperforming basis growth Specifically, our

a foresee average X% a range the we now, low an end contracting and across of at the between year. as fiscal fiscal 'XX. range higher average economy and our the sales at industrial growth of the daily X% As for economy This end flat assumes of

the during we've not year. the more The significant through territory, -- top end the of if erosion year above fiscal erosion do our expect of share in the the to started modest that fiscal even range. Inside higher environment you tell range implies given guided bottom we're to year. the of the of the the come market If end capture, in rest implies can the positive conditions particularly in year we deteriorate, Now rates rallying the range that I softens. market would company,

regional are will our of competitors bulk local the As disproportionately. and distributors, who struggle

goal of will additional yield through closer beyond at margins. it do playbook. that range fiscal second continue and uncertain to by envisioned, by aim words our at Kristen is we're cost Kristen what levers million growth goal to our amidst revenue to pull, lifting being a further expanding mission-critical in $XXX we go further say multiple adjusted ROIC, identified the XX%. prepared and few will softened And than the and operating least even We've shortly. our by Should third, goals more to least current an on we We end an set currently million Our which we've executing improve have guidance environment. to XX% our $XX detail savings, on this 'XX. achieving downturn of leveraging quickly shortly. these into also will adjust adjusted initiatives, more

new to emerge. In annual on that guidance our Kristen you remains balance now range. leaving including addition, will financials, any opportunities generation and through will the sheet us cash capitalize our positioned our take strong, well continue improving,

I'll Erik. then fourth of of quarter, with Thank you mission-critical initiatives. on update fiscal progress begin our a you, our review the

which XXXX. fourth it Before presentation, over a key and my On and primary reflect and metrics the fiscal on of X I results, for on to our reported the our with back can X I'll Slides fiscal Erik, see X be close morning. thoughts this quarter full Slides you X turn focus year basis. and adjusted guidance will

fiscal last week Our fourth this were billion. XX% versus sales year. in same the XXrd quarter at came up This the includes year quarter $X.XX and

for XX% the sales So on as basis, were quarter an compared year. same our the last ADS quarter up to

the XXX Our of fourth quarter acquisitions represented points growth. nearly basis

by daily over Account sales growth sector core single our other at XX%, and rates increased for type, high XPL spending. Marine and Government the sales public teens, under average was our contract bases customers fueled grew by customer U.S. high digits. for Looking National growth fulfillment

XX.X%, Our third our decline gross quarter fourth year's margin points from down XX XX of summer in and recent product basis approximately seasonal The quarter from for acceleration XXX down a growth quarterly the goods, basis basis mix was from sequentially the the from fiscal QX. points points impact public fiscal XX from last and basis sector our point headwinds rate acquisitions. the includes

August. implemented pace for strong in roughly both side sales $X.X Adjusted rates operating evidenced for the fronts, expenses are business, on that We sales. last expenses point past other were the expenses costs, in as hungry XXX net incurred in continue availability particularly mission-critical were as a restructuring testament to $XXX year's of Realization than to operating quarter earlier. for the to adjusted at example moves, a net of gains. to versus tangible response quarter $XXX we deliver suppliers, from the customers This our by adjusted sales on fourth as quarter. or also success metalworking the costs is We Erik $XXX productivity compared our Reported million prior XX.X% $XXX in expenses price and In $X.X reduction or continues operating in reported of product to XX.X% operating OpEx adjusted of versus see our X% million a million inflation year year. million of million year-over-year increase the of the last to slower million. remain basis albeit supplier shared the and year's approximately acquisition-related initiatives. continued MSC of

to Melville, on million of as $XX.X the that We a also improve sale adjusted York out recognized and well gain have facility, our New we comparability.

That was operating well margin as was same XX.X%, year-over-year. approximately costs compared restructuring as margin basis reported acquisition-related as current Our in the on fourth the adjusted point margin of adjusted XX% year. nearly improvement margin XX.X% resulted to XXX for quarter last incremental a Adjusted our to an gain XX%. sale XX.X% period year compared operating of for of in operating property, adjusted and

an XX margin For a I'll the margins. we our fiscal in year XXXX, XX.X% tier which adjusted to was the framework. of that basis points quarter operating XX.X%, and full basis, extra achieved of our top full added points squarely year annual operating reported margin for the roughly the adjusted and fourth basis on XX operating note here week

compared for per year well in earnings per an adjusted just gross Adjusted property, as all XXXX adjusted $X.XX and of exceeding sale on period. period, full to year XX%, XX%. margin was share over execution as per year were acquisition-related share and prior incremental incremental original share goal margin for same strong costs gain OpEx Our This margin prior fiscal Reported leverage. reflect earnings to our $X.XX of in adjusted as of were to restructuring earnings the of compared quarter continues XX%. at sales $X.XX year's levels: the performance, current adjusted levels the increase $X.XX as the

balance to sheet. the Turning

of inventory, build rising quarter, are revenue the chain current our end up supply million were $XXX and sales inflation. with from The carrying QX's can You is of million growth, as the of continuing receivable fourth with the inventory we that disruptions the balance. fiscal see also Accounts ongoing double-digit $XX consistent growth.

or was continued compared range divided XXX% operating QX cash to XX% we annual XX% brings flow saw conversion improvement the to conversion our cash by year. This flow cash quarter. last cash the this conversion of communicated income. conversion we in cash XX% expected, earlier net rate XX% As sequential our to in

capital expenditures fourth million. bringing the million were roughly CapEx $XX year in $XX to Our full quarter, our

Slide XX. to Moving ahead

million back flow for also the of is cash our average compared in quarter current as up $XX XXX,XXX prior million quarter. during at see at the about year shares $XX.XX. we can price $XX Note $XX an shares just over year-over-year You buying quarter, free spent to the that also million

to we in in dividend our also ordinary Finally, November. announced increase be X% a paid

Our quarter. $XXX quarter fiscal $X the of total third debt reflecting from fourth million was the a at end our million, increase

the in of of $XXX of the net cash rate of As the the million for million, end at $XX was composition third end roughly debt. resulting was from at our floating million $XXX XX% other debt, fixed the XX% quarter. were rate debt and quarter, down and the debt equivalents Cash

Slide mission-critical brings on the of XX. in quarter, for Let fourth savings million, $XX with our million $X In and another me additional investments $XX year. on update $X our to achieved and fiscal savings million and million. productivity XXXX our fiscal year goals invested right you and respectively, we now our That line guidance

One of of mitigates is strengthens quite the distribution with the operations inflation. we're continued our automation enhancements effects our that labor centers the programs and of pleased

have gross and to total XXXX. date, the fiscal savings target least $XXX by we For program achieved at of $XX on million of to we gross million, remain hit savings cost

on turn fiscal to let's XX. which XXXX guidance, is shown the Now year Slide

daily sales and XX.X% are adjusted XX.X%. margin We growth average an operating X% X% between and of to estimating

the few on ADS fiscal full XXXX. our to fewer and me growth out days XXXX has found in days, Specific keep website. factors a The can Let fiscal point range, assumptions mind. calendar to than six XXX be fiscal

are acquisitions we to year. basis made and during guidance ADS for XXX growth included As our add These we our the points two quarter. fourth roughly mentioned the before, in

environment. In assumptions, our economic forecasts to terms softening point and a of readings most

of to point and experienced our the to At offset rates as basis, industrial the to acquisitions from will point channel we economy customer XX to benefit a similar strong, most growth we price mix. trend, slowed points headwind we be October's evidenced by expect headwind. fiscal Overall, XX margins XXXX, flow versus will accordingly. the level, sequentially XXXX. XX.X% currently to gross to of typical a XX pose rate is growth margin assume gross a through year-over-year and basis cost expect we fiscal and favorable down year spread growth from basis our basis While do full On XX September our XX XX

inflation, headwinds the despite labor from expense of line, mission-critical to On the growth our on strategically sales in operating continue expect reduction invest strategy. percentage continued of and we business in support a ongoing freight will we basis and

As expect of mission-critical program through cost I mentioned assumptions, Factoring million. in we at earlier, we additional to our range those XX.X% XX.X%. to $XX achieve be the in to least savings operating expect margins adjusted of

XX operating our this operating approximately acquisitions the XX Also first at expansion reflect week nearly the expansion operating full XXXX, points their range. points fiscal 'XX, basis by the in Excluding extra us. benefit margin would points of basis fiscal year all recently note with from within completed that margins dilute --

the While an achieve of and dilutive WACC to EPS operations. their track to operating are to acquisitions margins year ROIC full on year, first both accretive first in above in

margin full on margin. about XXrd operating fiscal Lastly, XX mind and on -- XXXX in margin, year an our operating please added week mentioned to the as points keep that operating basis I earlier,

additional For color quarterly give year. through modeling purposes, the progression I'd some like on to the

We basis expect to points. remain plus or level, a gross margins minus consistent at XX

we hikes, $XX would XXXX improve our sequentially we interest Holding as expense of for the and expense rates given percent important tax operating rate that quarter roughly with and adjusted and year. note through and Additionally, fiscal A interest as margin initiatives, operating to progress of under of million levels, to million rate constant Please expense our expect mission-critical as $X further a interest sales to benefit from expect continue couple current we of we points. additional the significantly. debt per expectations slightly rise XX%. will environment current adjusted

debt conversion acquisitions. our downturn buybacks final to Given will free is we or cash accretive reduction, I'd area, our expectations discuss have One flow playbook. cash like to for an operating deploy over into XXX%, flexibility

a While any positioned in well a we the environment. are change signs we yet to of experiencing navigate not slowdown, are

in on reprioritization spending, We across we defined our includes a or in of clearly actual have series from pullback staffing the operating and that everything levels profit changes discretionary forecasted of changes and revenue triggers the for investments. take business. initiate will actions This

as remains down And sheet levels a us enable In funds. the addition, our debt of cash This becomes generate downturn. will we capital the balance pay working strategically to invest source when economy slows, strong. through of and/or flow to high

environment, current I regardless So we positioned happens. it of Erik. while we back certainly prefer now well over whatever will to the turn feel

Kristen. you, Thank

As up into we're XXXX, with ahead fiscal XXXX fiscal full I remain quite we company's pleased and our wrap performance. speed

to hence, we'll XXXX into We and our well and open we squarely are now of of team - work and and end up entire remain tracking that and can for share expansion. the to market dedication, the the above of IP, our translating profit the seeing focused build momentum company. are then control, capturing with goals growth macro each thank like fiscal we'll mission-critical inside on hard line growing for Regardless I'd what their environment, questions. for

[Operator from Blair. Instructions] comes ahead. Please first William question with Merkel go Ryan The

Hi, everyone. good morning

Hi Ryan.

Hi Ryan, are you? how

with details in price we but for that assume first of to Can volume give there's price? price the quarter. was tricky it. start sales of and Doing the know guidance so me don't I it's And we versus at I I a contributing well, outlook. all want volume? it XXXX, X% assumptions for think let more midpoint the on know the sort the should off, thanks I appreciate time, say, you

Yes, Ryan.

the that is from price So from disproportionately range, contribution higher bit is XXX. right. lower, first that a yes, price, end fair bps at there would the say that's contribution I lower little of all, a XXXX the to The closer of assume to XXX

it provided. down would sense When the point could thinking thinking X% can How the are you worse you be put IP finer makes in or a you okay. then that on lower you that? what contracting range it, Got about industrial end? that it say that? And just at macro like on - economy, assumptions, you Are

Ryan. Yes,

because at are results, with could start conditions time it's certainly interesting October, is trending growth you current an So similarly. And current by - rate, if you Kristen good solid. September's the the still we look see our mentioned customers

positive off and the growth starting year we're double-digit territory So IP in territory. obviously,

is So right? is good the uncertain high end we're - have and on indexing range. yours, effectively, so the the where of as we're flat assumptions, a This as Basically, really at range end guess IP. our range, end Ryan. the times. making we're of IP, low the look, you And Yes, the of it is the high assumes

through fiscal this is Now course of an the our average year.

we're of territory, math assumes positive that the The It band just so more that the IP you of erosion would that negative. work by other back of erode, that the to realize some aggressive hand, year the such even So end on be full in conditions is range starting turns the assuming in the that low of flat. modestly IP would erode - is and of half fiscal. that out IP. end point, get the higher our environment here average such negative to at the average The negative an that our

That's a half pretty the fiscal, territory. negative So positive to of territory back average in negative starting get you if in year by year assumption. the imagine for healthy the we're can the to our we're

a longer big hearing? is that have maybe that that just is than we're normal. one [ph] faster hear, something something sales. those Make little than sense, you're customers that backlogs, little And Is bit And help I And thinking? okay. higher heavy bit a from sales, sustain could then manufacturing different cycle this that what last

I Ryan, do it's think possible.

take part do there's is, I on are from there and So Ryan, larger a now been conditions think automotive, like point. it's what back have such hearing that's been that yes, industry aerospace long, we're - a even I yes, their for you is that of a - just that supply-constrained fair so is stable, think customers industries, and where

a think see, So We'll but could us it's that, there while. is for potential I that fair a observation. carry the

Got thanks, it. right, All congrats.

Thanks, Ryan.

Thank you.

Thanks.

comes with Please next Stephen ahead. go question from The Volkmann Jefferies.

just macro the at Hi, sounds question. building real of looking of of think picture good any is Thanks actually saying taking and it trying of you're the guys. any your guys. broad that like that, you from customers? morning big you're the prudent. I issues consumer-facing of to not Erik, hearing be maybe you're mentioned for what be May sort But sort some off

customers more any are saying? color what on Just actually your

Steve. Yes,

So say feel solid. in are solid revenues internal general, activity now, some our would levels pockets. we trends solid, our look customer I at right When isolated feel own with

So anything now, feeling they're touching consumer that's some where softening. right

instance, are bit. a could Steve, industry, is base for down feeling in the still we RV processing you is food the of imagine, sector our solid. So a heavy What bulk industry, customer hearing actually in for But it's quite we're bit. that's fairness, is hearing caution.

But they seeing that headlines. just it indices. of some reading not look Everybody seeing is in I think So a self-fulfilling. could ahead, business. their sentiment as Everyone's of our customers, be they're the lot the

But still no, in what cautious they're in now, for a we're taking stance expressing is caution XXXX, we're seeing good. our somewhat range. So why which it's terms guidance of

then end you. but And this possible thank is to is not Okay, a be do what may think helpful, markets, fair of sort question, exposure your - that's just it consumer you roughly? type

Really, it's The tough tell multiple is Steve, number, that would bulk is shops heavy our many small. it's industry pretty number, tough of are but and work because doing business to what shops, get us those give you I machine customers, job of one a to It's our you of industries. a for that's to so really for not consumer-facing.

of the one, about on. transportation I'm other seeing just think commodities, the pass big that's about we're or curious I'll declines least through a to mean, then what it's it should metals thought. And And how whether think that costs costs, do Yes, guys? input are at final I in plays we logistics on you down, even I indexes? how we of and energy sort how lately, lots

Steve. Yes,

expectations that you booing is, outpace coming [amaze] This things through it So the what inflation the XXXX, a there. have that cost suppliers our we're still thing of of bit an in still size, other and month. rate in I'll from is seeing pace you're late continue every correct seeing are was are first on hearing those And and you're sort the early factors - We're late of numbers certainly increases at down. to or but XXXX, costs. cycle not the calendar all say unusual coming calendar

major input cost You a - a issue most still wage rates is and have are labor and for high. major companies

I bit. down little things a do part will historically, our the never, never lines deflation. say you price see There period come come get of of ultimately it the price, typically not if finished booing could that's raw So is but you don't tell really itself what for most of a historically, can do terms we product they the reason percentage is where past most small - we relatively cycles. material be a but good. in The don't sell in down

factors. so And of have other you lots

say Now again, mean historically, price never, but never not it's deflation.

Hi, appreciate time. but I the

Thanks Steve.

ahead. David Baird. question go The Instructions] [Operator comes from Manthey with next Please

Good everyone. Yes, morning thank you.

Dave. Hi

to be theory mid-single-digit deteriorate, will you just current right? do mean when the from When do above just Erik, rate? does off slow - report you'd You mean clear you First say you it if you XXX% conditions positive, don't the it's framework, IP about and talked not - said not here. framework growth deteriorate, in not

flat look, assumes IP, of our the basically, plus or - IP top a what if minus roughly is Dave, bit. we a - meant, that framework Yes

- nicely proof points would tracking meaning for couple framework. of saying or is more the year we what a point seeing we're well expect a nicely positive, that thing for the above top we're is is is obviously look IP top and minus. end were October, above if plus of positive to look, the the where or take And rate the at and growth roughly September on be So same the range positive, is, what IP

what that's So meant. we

that a guess you're talking remaining at framework growth All I that there's, you add calendar And Kristen, framework, sliding of related to that Tower goes your about you straddled to the going a right, mix point? mention, of year, scale that. what and thank the are and relative is - a for at assuming X% ET are couple within you in of some because then via acquisition. X% this point sort price And you flat methodology? of question mentioned price you assumption, the to then Did points

a Yes few thoughts. Dave,

then down First, price the that of it framework around the at definitely or fair cost assumptions the whether think potentially I be growth, that's targeting you right? we or get And to gain and end, where high not Did the basis that points end catch volume price gain in we'd you're was it's to upside of on question went carryover The would the what there and part perhaps falls. - assumptions. some flat IP I of kind assume vary be share of think share because I whether regardless does and of second low break didn't of price XXX your year. the the

Yes.

Yes, not. it does

until a fiscal off in headwind still we're price we're to sheet. that We're the flip on and regard that the everything timing balance to right So costs plus seeing based now XXXX of the from for the roll expecting not positive year.

one And you previously small it, customer in one nonmanufacturing then okay. some your just breakdown, or here, other segment customers. your Got breakdown reallocated

landed definition you lot by to heavy of looks them just it Could like think was? talk I'm a about that. what I manufacturing. change confused in the other

kind of them. job as the to you before, where like shop apply mentioned fall to or us much know coming have those you segments of a lot Dave, there happened into. Erik in, a other it's to oftentimes definition process a difficult we of necessarily Yes, don't other. so customers not times, for But is attribute change account because, use third-party one have to we where them which a And to our so help

manual the process we and to. bucket. of new come to customers And that actually fourth that's its a best why big you number, So happens. basically And the have of does process actually other we out we in quarter, the go gotten in of and we that with and is third-party kind in. that a customer that have did backlog year into other do improvement first on the saw we end attribute shift market pass, this think or the okay, Like after where say, of we've kind segment this

the made So to ability and we the going about more feel on basis that that forward. pretty change regular we do good much a

See right you All Okay thank couple got in a you. it. weeks.

Take care.

Dave. Thanks

Thanks Dave.

Please last comes KeyBanc. question Newman And our with today Ken from go ahead.

guys. good Hi, morning

Hi Ken.

morning. Good

Ken. Good morning,

as over price clarifying difficulty] guide just growth on this year, a from I much question had last price color difficulty] here. for year? [technical supply of Maybe the how in - from effect [technical a carrying just on sales any

Ken, -- I you're think

that? you Can repeat

breaking little you're kind Ken It's of hard little to a bit. bit a hear. up

any how you Yes, on last just is growth carryover asking, that increases color side, within I from the was that sales effect much year? the enacted

is based so increases like you I'd the healthy But tell you didn't the look expect doing think give think be Yes, and peaking of the getting those into range back to about a you're first at amount at you should benefit Ken. a and the increases of still carryover, timing framework from is that end in from I'd you of the higher we kind healthy end that sequentially because of the which a contribution if price and way high timing the go through disproportionately year, And XXXX. the it assume in to of low price price, on the the if XXXX, specific price quarter well. pretty price of at then in the that effect on went

my the year, in for this bit few you're cash deals M&A expectations funnel last more a year? - a this for you've about free already follow-up, then more And it. you're deals a quarters. little and pretty done expecting strong talk, flow Maybe Got the few

Look, zoom is that. maybe time. or X.X from good would We've how pleased. think is, interest Yes about we our in got - rates, business, capital one unique a happy we are this do working. cash. scrutinous a us. just We're Ken, reinvestment say highlighted we're even comfortable into very and pleased to than turns M&A I'll out now. going with of allocation what we position which really we're we've some sitting more year, and be about to I to right use bit sitting we're leverage, fairly a is What remains spot minus the areas for others, priority do that which really core plus at We're given philosophy our And what's there. so happened feel Look,

reduction, Our three in that expect free tuck-in of be business, platform priority in two what debt of strategy the is C-Part our M&A. second a got what us you to look couple evaluate I we with floor saw we What built roots on work here, then Obviously, really plant quarter OEM being consumables, steady cash platforms going the you're part was our as at CCSG dividend. the Fasteners do buyback we're the And respect into third. technical a and and do Ken, of you of we've and and do high us And deals. things And flow the that fit the those business excess are What ordinary generate. metal tell continued and a of seeing to on to our three share touch. going being terms being last out can brand carefully. of to the growth be returns with three all we've mind would is M&A,

that small compared small see will which to company existing M&A tuck-ins will be us into to it size platforms. and this think be a if relatively you So platforms. year, do relatively I And theme, those continuation of

one would I again, to that's never current big really core platforms. hurdle the those do be do I something really but high would So to to high never expect mean, given and of have you something us, outside the of not say environment,

on that - discuss difficulty] group Right maybe and margins you operating color expect do the be do to difficulty]? some more expect more the apathy kind wants follow-on [technical just, little for about get terms margin that. or how how one you may any of Tower to mean, of bit I profiles in is where color a you you [technical Engman-Taylor that here, expect think

I've and it Yes, Ken, industry. but a the where with tuck-in you're is little, a margin profile tell performs right, time. going acquisitions very below smaller you up of it's be And If well and going how that's right the us what split your distributor I got were if think on gross question margins to typical the breaking here, is get are very MSCs over we back on -- it small we'll we operating start. see that their to typically, that typical the

are of those Those though out of as operating those immediate time to are dilution framework, opportunities highlighted see opportunity things cross-selling margins synergy gate the one, year advantage and synergies. great kinds synergies an our What is a you happens to of we MSC so, cases. the and all And And to Kristen over percentages. have take cost in margin margin those effect both happens purchasing lift is like are gross scale. margins, margins synergies with freight all what

to are grow, margins, incremental see own margins they businesses maybe we actually well the today. the get really we once but are business, so, quite average good. level above those incremental not we what And company to where margins, can the And MSC is quite

on first looking especially we're deal be highlighted, the should so, They're compelling. actually above we full year. WACC economics become good, capital, when And at return pretty within really we as

thanks. it, Appreciate

I question-and-answer John for closing our to This to turn session. back concludes conference would over the any remarks. like Chironna

earnings XXXX so the Thank us Thanks you, Andrew. fiscal is quarter now And X, quick seeing A again reminder be in several date that months, look for first forward January few set we we'll over next joining you conferences, XXXX. our to for today. investor attending person.

you now for today's The Thank presentation. conference concluded. attending has

You disconnect. may now